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11-08: Adapting Property Tax System
Pragmatism or Principles? Property Taxation Valuation in Finland
1The World Bank, United States of America; 2Aalto University, Finland
The paper discusses international best practice in mass property valuation and property taxation in comparison to the case of Finland and reveals shortcomings relevant globally. Earlier work by the World Bank, FAO and the Centre of Registers of Lithuania defined pre-conditions for successful value-based recurrent property taxes including access to quality price data, efficient tax administration, and appropriate valuation infrastructure. Finland has reliable land and property records, ample geospatial data, transparent markets and strong valuation infrastructure that adhere to international standards, and all these are applied to property taxation valuation. However, the article raises a number of issues with the equality and accuracy of the property taxes stemming from the ancient split of property taxes to separate land and building taxes, valuation that targets condominium buildings rather than apartments, restricted access to apartment market information, and a number of other factors. The article’s conclusions on the way forward in Finland are relevant globally for countries and cities introducing recurrent property taxes in the era of covering digital records and transparent property markets.
Modernising the Delivery of Statutory Valuation Services: An Irish perspective
1Valuation Office, Ireland; 2World Bank, United States of America
Between 2008 and 2011 the economic and property crash in Ireland witnessed a 50%+ collapse in commercial property rental values. Demand from government and other stakeholders to conduct and accelerate the national revaluation programme placed a huge strain on Valuation Office resources. The aim of the revaluation was to restore Equity and Uniformity to an outdated valuation list and in the medium term to conduct a revaluation every 2 years in order to remove a repeat of the impact that the existing time gap since the last revaluation in 1988 was having on ratepayers. With major financial and capacity constraints, there was pressure to provide efficiency at the lowest cost. In order to achieve this objective the Valuation Office introduced a significant programme of change. The Office was about to enter into a transitional phase, moving from using traditional labour intensive practices to a modern office that will use technology to its optimum effect in order to drive efficiency and reflect international best practice. The purpose of this paper is to outline a number of key developments currently underway with this regard and draw lessons for other countries that are establishing similar systems.
Street addressing - a Global Trend
World Bank, United States of America
Street addressing is not just a numbering system. It is a methodology to map and organize data for urban management. Earlier street addressing systems focusing on city centers have not kept pace with rapid, unplanned urban growth and expansion. With the advent of e-commerce, efforts in disaster resilience and advancements in geo-spatial technologies, street addressing is undergoing a revolution today. More and more cities are embarking on street addressing programs. This paper presents the main findings of a demand-assessment conducted to assess the spread and objectives of street addressing programs globally. The survey established that street addressing has proven to be an accepted tool for improving urban management by municipalities globally. Further: i) although new geo-spatial startups get the most sound-bites these days, public agencies play a strong role in street addressing today, ii) while most street addressing initiatives are part of larger urban programs to improve service delivery, a surge in e-commerce reflects the growing interest from private investors, iii) though trendy approaches include geo-grids and geo-location “apps”, the low-cost World Bank street addressing methodology is used widely. On the horizon, lies the potential for achieving larger impacts at lower costs in urban governance.
Predicting Taxpayer Behaviour and Compliance: An Analysis of Jamaica’s Property Tax System
University of Reading, United Kingdom
Property tax compliance in Jamaica has been described as a national disgrace, yet the reasons why so little tax is collected remain unclear. Tax literature suggests a rational economic trade-off between the benefit of evading tax versus the risk of getting caught and paying a fine, and the tax payer is prepared to take more risk the higher the amount of tax payable. Then there are behavioral reasons, centering on how individual taxpayers think others behave, on the perceived fairness of the tax system and benefits obtained from paying the tax. Property taxation has its own idiosyncrasies, particularly in developing economies. Administration may lack resources to maintain the property tax. Legislation may be unclear regarding who pays, particularly where tenure is customary or informal. Levels of tax may simply be too high. Enforcement action in cases of non-payment may be weak. This paper examines property tax compliance/non-compliance in Jamaica, contextualizing it to provide insights on how the property tax system and land market has been shaping the compliance equilibrium. This investigation focuses on land and property issues; namely the nature of taxable tenure rights and the asymmetry of land and property information between taxpayers and tax administrators.